Primark sales drive AB Foods' half year results success

Primark

High street budget clothes chain Primark expects total sales to be up 23% in six months to 2 March, while like-for-like sales - which strip out new store openings - are set to be 7% higher.

Profit margins were also higher because of lower cotton prices and better trading.

As a result, Associated British Foods says its half-year results will be ahead of expectations.

With the UK economy and economies across Europe seeing weak or negative economic growth, Primark's focus on cheap clothing has proved to be popular among cash-strapped consumers.

Peter Saville, partner at advisory and restructuring firm Zolfo Cooper, told SI: “Primark’s stellar success flies in the face of conventional wisdom. While the rest of the retail world is obsessing over online selling and multichannel strategies, Primark is powering ahead despite it having no online business at all.

"Primark has become much more fashion-focussed, with fast-turning stock and a nod towards the latest trends. As a result, the company has been able to offer low-cost fast fashion at a time when most consumers are keeping a careful eye on their spending."

Primark stores in major shopping destinations like Westfield Stratford City and London’s Oxford Street have been attracting cash-strapped consumers in droves, driving footfall to these prime retail spaces.”

The chain has been expanding rapidly. AB said that it had 15 new stories in the past six months, taking the total to 257.

Its expansion into Europe includes six new stores in Spain, two in Germany, two in Austria and one in the Netherlands.